Law Firm Fenwick Rejects Claims It Helped Enable FTX Collapse
Fenwick & West, a outstanding Silicon Valley regulation agency, has rejected allegations that it performed a central function within the collapse of crypto trade FTX, calling the claims “facile” and “flawed” in a court filing on Monday.
Key Takeaways:
- Fenwick & West has rejected claims it enabled FTX’s collapse, calling the allegations speculative and flawed.
- The agency argues it solely offered routine authorized providers and had no information of fraud.
- Fenwick says the amended lawsuit recycles claims already dismissed in comparable circumstances, together with these towards Sullivan & Cromwell.
The authorized pushback is available in response to an amended class-action lawsuit filed by FTX customers earlier this month in a Florida federal courtroom.
Plaintiffs are in search of to replace their 2023 swimsuit, arguing that latest revelations from FTX’s chapter proceedings and the legal trial of founder Sam Bankman-Fried recommend Fenwick offered key authorized help that enabled the fraud.
Fenwick Dismisses FTX Allegations as Speculative and Deceptive
In its submitting, Fenwick dismissed the allegations as speculative and deceptive, asserting it merely offered routine authorized providers typical of any exterior counsel.
“Fenwick will not be responsible for aiding and abetting a fraud it knew nothing about,” the agency wrote, “primarily based solely on allegations that Fenwick did what regulation corporations do day-after-day — present routine and lawful authorized providers to their purchasers.”
The plaintiffs’ broader class-action case additionally contains claims towards celebrities and firms linked to FTX.
Whereas regulation agency Sullivan & Cromwell was initially named within the case, it was later dropped after a court-appointed examiner discovered no proof the agency had information of the fraud.
Fenwick mentioned the most recent criticism recycles comparable accusations beforehand made towards Sullivan & Cromwell, noting the plaintiffs “provide no credible motive why the identical allegations ought to survive towards Fenwick.”
Central to the brand new claims is testimony from Nishad Singh, FTX’s former lead engineer, who reportedly mentioned Fenwick’s involvement in structuring loans.
Fenwick countered that Singh didn’t accuse the agency of serving to cowl up misuse of buyer funds. As a substitute, the testimony described commonplace authorized work on “founder loans,” that are frequent in startups.
Fenwick additionally argued that dozens of witnesses in Bankman-Fried’s legal trial testified to being unaware of the fraud, together with FTX’s inside legal professionals, workers, and different exterior advisors, including that “Fenwick is not any completely different.”
Fenwick Rejects Claims It Promoted FTX’s FTT Token
The agency additional criticized new allegations that it helped launch and promote FTT, FTX’s trade token, as violating Florida and California securities legal guidelines.
Fenwick labeled these claims “frivolous” and “premature,” accusing plaintiffs of submitting them solely after a decide allowed state securities claims to proceed towards movie star endorsers.
“That is an eleventh-hour try and recast legal professionals as ‘promoters,’” Fenwick mentioned. “However this concept too goes nowhere.”
The courtroom has but to rule on whether or not the amended criticism might be accepted.
As reported, FTX has introduced that it’ll begin its next round of cash distributions to collectors on or round September 30, 2025. The file date for eligible claimants was set for August 15.
The funds might be processed by FTX’s designated distribution companions, together with BitGo, Kraken, and Payoneer.
In the meantime, a Chinese language creditor representing over 300 customers is opposing FTX’s proposal to restrict payouts in 49 jurisdictions, together with China, arguing it’s legally unfounded and unfair.
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